Key to under- standing the early events in prohormone processing is the identification of the enzymes involved. Recently, this group and others have shown that a group of putative mammalian endoproteases, furin, PC2 and PC3, identified by homology to the yeast mating hormone processing enzyme, kex2p, are able to enhance the cleavage of precursor proteins when co- expressed in heterologous cells. Furthermore, two of these enzymes, PC2 and PC3, not only enhance processing of proopiomelanocortin (POMC) and proinsulin at authentic paired basic sites, but also have a pattern of expression consistent with a role in the tissue specific processing of these substrates in vivo.These co-expression studies, however, fail to show a direct interaction of PC2 and PC3 with their putative substrates and also suggest that factors in addition to differential expression of enzymes modulate the cell-specific processing phenotype. The proposed studies will first examine cleavage site specificities and kinetic properties of purified PC2 and PC3 using intact POMC and synthetic peptides in vitro. This information will aid the development of specific inhibitors and affinity labeling reagents with which to dissect the functional properties of these enzymes in vivo. Second, the importance of proteolytic maturation of PC2 and PC3, including its possible contribution to cell type specific activation of the enzymes and to the regulation of prohormone processing will be determined. Third, the following hypothesis will be evaluated: that compartmentalization and/or membrane association of PC2 and PC3 within the regulated secretory pathway is determined by their amphipathic helices and/or a protein binding domain conserved in evolution.Finally, the possibility that tissue specific prohormone processing reflects a two-tiered system, combining differential expression of PC2 and PC3 with post-translational regulation will be tested. Cell type-specific maturation, activation and modulation of PC2 and PC3 in vivo will be sought.